Three days before Elon Musk announced victory in his bid to acquire Twitter and take it private lawmakers in the European Union announced a deal to advance the Digital Services Act imposing strict new regulations on social media networks operating within the 27-nation bloc.
The timing of the two announcements was coincidental, but they were not unrelated.
One of the more striking aspects of the conversation around Musk’s pursuit of Twitter, including from Musk himself, has been its U.S.-centric focus. Much of the discussion has been framed against the backdrop of the U.S. culture war and the ersatz controversy over so-called cancel culture, such as around whether Musk will invite U.S. figures like Donald Trump, Katie Hopkins and Alex Jones to rejoin the platform after they were banned by the previous management for violating Twitter’s policies on hate speech and disinformation.
“Free speech is the bedrock of a functioning democracy, and Twitter is the digital town square where matters vital to the future of humanity are debated,” Musk said in a statement announcing the deal on…where else?, Twitter. “Twitter has tremendous potential – I look forward to working with the company and the community of users to unlock it.”
Yet Twitter is a global platform. It’s community of users reaches around the world, into many different social and political contexts. Taking Twitter private will not exempt it from having to follow the rules in the various jurisdictions where it operates, as European officials were quick to remind Musk.
“Be it cars or social media, any company operating in Europe needs to comply with our rules – regardless of their shareholding,” Thierry Breton, commissioner for the internal market at the EU executive body, warned in a tweet of his own.
A spokesman for the UK government, which is no longer a member of the EU, nonetheless added, “Regardless of ownership, all social media platforms must be responsible.”
Breton was referring specifically to the Digital Services Act, which is now expected to receive final approval from the European Parliament by October, and will introduce new EU-wide rules around content moderation by social media platforms, takedown requirements for content regarded as illegal, targeted advertising and more.
It will also place certain large platforms under the direct supervision of the European Commission, which can levy fines of up to 6% of a platform’s total global annual revenue for violating the rules.
Yet the DSA is only the latest in a series of measures taken by the EU to dramatically rewrite the rules of the road for technology platforms and how they operate. In March EU lawmakers approved a framework for the Digital Markets Act, which will require certain designated “gatekeeper” technology companies such as Amazon, Apple, Google, Meta, and Microsoft, to open their services to competitors and limit their ability to favor their own products.
The EU Copyright Directive, adopted in 2019 and now (slowly) being transposed into member states’ individual copyright laws, creates new liability for online service providers for hosting copyright infringing content on their platforms and requires them to take active measures to prevent its being posted.
The Court of Justice of the EU, the bloc’s highest tribunal, ruled just this week that the use of upload filters to prevent such content from being posted, does not violate free speech, putting to rest one of the main arguments complaints about the directive.
While not all of those new regulations will directly impact Twitter, they reflect European policymakers’ growing determination to install the sort of legal and cultural guardrails around the digital economy that the dominant technology companies have long sought to avoid.
Nor is Europe the only territory where governments and courts are taking steps to shift the effective balance of power between online platforms and their users and content creators.
Last year, Australia passed a law to require online platforms like Google and Facebook to pay Australian news outlets for the right to host, share or display news content on their platforms. The Canadian government introduced a similar measure earlier this month while the EU Copyright Directive provides news publishers with a new “neighboring right,” enabling them to demand payment for the reuse of their content.
Made in America
It’s no accident that nearly all of these measures are targeted primarily at technology platforms created and based in the U.S.
There has long been a perception, in Europe and elsewhere, that the dominant technology platforms, like the internet itself, too closely reflect what many view as the distinctly American, laissez-faire-cum-libertarian cultural and political milieu from which they sprung.
As the cultural and economic power of those platforms has grown, often at the expense of home-grown varieties, that perception has slowly hardened into a a determination to assert more familiar, natively accented cultural and economic priorities through national or regional regulation.
The Australian news payment mandate, for instance, was explicitly framed as an effort to preserve and protect local Aussie media from the ravages of global (i.e. American) tech platforms such as Google and Facebook.
The various European regulatory measures are broadly intended to make the digital economy there operate in a more European fashion.
“A lot of American executives have thought the world operates like America and it does not,” William Perrin, a policy expert whose work has influenced the regulatory framework in the UK, observed to the Guardian newspaper. “Western Europe has the European convention on human rights which focuses on a balance between rights and is very different to the first amendment.”
Into the path of that train now steps the self-proclaimed free speech “absolutist” and libertarian-leaning Elon Musk, an American bazillionaire with a history of picking fights with regulators.
How well Twitter would fare in any such fights, however, is far from clear. For all its political salience, Twitter has nowhere near the scale or financial resources of Amazon, Apple, Google or Meta. And even they have been unable to work their will with European policymakers.
As negotiations toward the Digital Markets Act and Digital Services Act ramped up in 2021, U.S. tech giants greatly ramped up their lobbying activity in Brussels, according to data compiled by the European Corporate Observatory. From 2020 to 2021, Amazon, Apple, Alphabet (Google), Meta (Facebook) and Microsoft combined increased their lobbying spending in the EU from €22.9 million to €27.0 million, paced by Apple, which went from €3.5 million to €6.5 million.
Yet they were unable to derail of significantly water down either piece of legislation.
Even closer to home, Musk may find the political waters choppier than he is anticipating. In March Sens. Patrick Leahy (D-VT) and Thom TIllis (R-NC) introduced the “Strengthening Measures to Advance Rights Technologies”(SMART) Copyright Act, which among other things would require social media platforms to implement technical measures designated by the U.S. Copyright Office to block the uploading of unauthorized copyrighted content. In introducing the measure, the lawmakers vowed to “hold technology companies accountable.”
The “Journalism Competition and Preservation” Act (JCPA), meanwhile, which would enable news outlets to bargain collectively with digital platforms over payment terms for news content, continues to advance in both the House and the Senate.
Even if nothing comes of those bills, moreover, European digital regulations have a way of becoming de facto global standards, as U.S. tech companies discovered with the EU’s General Data Protection Regulations (GDPR). Given the cost and complexity of trying to maintain parallel internal systems and operating models for different jurisdictions, most U.S. online services ultimately adopted the stricter European rules across the board. Something similar could well happen with the DSA.
In short, the two-decade long content and data collection free-for-all on digital platforms is starting to face pushback on multiple fronts and in multiple jurisdictions, which ultimately could greatly increase operational complexity and cost — to say nothing of liability risk — for digital platforms, even or perhaps especially for very large, U.S.-based digital platforms.
I don’t think Elon Musk — who pretty clearly is acquiring Twitter on a lark — is going to find it as much fun to play with his new toy as he seems to think. He’s paying more than it’s likely to be worth, using debt that will take most of Twitter’s cash flow to service, at a time of increasing political and regulatory scrutiny of technology platforms’ broader economic and cultural impact, all amid a slowing global economy.
I put the over/under for his holding onto Twitter at 2 years.